HudBay issues resource update, railway warning

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HudBay Minerals Inc.  [HBM-TSX, NYSE] said Tuesday it is seeing limited railcar availability in Manitoba due to weather-related impacts and higher railcar demand in the rail network in Canada. As such, first quarter, 2022 sales volume in Manitoba is likely to be impacted the company said.

The warning came after HudBay said mineral reserve growth replaced nearly 100% of mining depletion over 2021, extending mine life for the Constancia copper project in Peru and Snow Lake copper project in Manitoba by one year to 2038.

With the incorporation of Pampcancha and the Contancia Norte pit extension, annual production at Constancia is expected to average 105,000 tonnes of copper and 60,000 ounces of gold over the next seven years. That marks an increase of 35% and 20% respectively from 2021 production levels.

Meanwhile, a positive scoping study on underground mining potential at Constancia Norte has resulted in an initial inferred mineral resource estimate of 6.5 million tonnes at 1.2% copper, adding potential to increase production at Constancia after 2028.

Elsewhere, ongoing exploration drilling at Copper World in Arizona has the potential to extend the known mineralization on private mining claims; preliminary economic assessment remains on track for completion in the first half of 2022, the company said in a press release.

HudBay shares advanced slightly on the news, rising 0.82% or $0.08 to $9.82 on volume of 490,210. The shares are currently trading in a 52-week range of $11.62 and $6.70.

HudBay is an integrated mining company, primarily producing copper concentrate (containing copper, gold and silver), zinc concentrate and zinc metal. The company owns four polymetallic mines, four ore concentrators and a zinc production facility.

The operations are located in northern Manitoba and Saskatchewan, Peru and Arizona.

The company recently commenced gold production at the New Britannia mill in Snow Lake, Manitoba. Refurbishment activities at the gold mill were completed in June, 2021, followed by commissioning and startup in July, 2021.

The mill achieved first gold production on August 11, 2021, in line with timelines assumed in recent company guidance and ahead of the schedule to produce the first gold before the end of 2021. HudBay is also completing construction of a new copper flotation facility at New Britannia, which remains on track for commissioning and ramp up in the fourth quarter of 2021.

HudBay has said its Lalor Mine (gold, zinc, copper, silver) in Snow Lake is fast becoming a meaningful low-cost gold producer that will benefit substantially from the refurbishment of the New Britannia mill.

Annual gold production from the Lalor and Snow Lake operations is expected to increase to over 180,000 ounces, during the first six full years of New Britannia’s operation at an average cash cost and sustaining cash cost, net of by-product credits, of US$412 and US$788 per ounce, respectively.


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